LIVE FUTURES 18/10: LME metals prices stay high; eyes on backwardated spreads

October 19, 2021 / www.metalbulletin.com / Article Link

Base metals prices on the London Metal Exchange mostly rose during morning trading on Monday October 18, due to continued fears of supply tightness.

Copper has hit a high of $10,452 per tonne already this morning.

The three-month copper price was last at $10,292.50 per tonne, up slightly from $10,281 per tonne at Friday's close. Available stocks on the LME hit their lowest since 1974 per tonne on Friday.

"It seems the market has started the next week in a state of panic as the shorts in copper get squeezed even more with the price [rising again] and everyone will no doubt be waiting to see what the LME stock numbers are," Kingdom Futures director Malcolm Freeman said.

There was a 5,150-tonne delivery of copper into LME sheds on Monday, with the majority into Busan, South Korea. But at the same time 5,175 tonnes were delivered out.

Low stock levels mean that LME spreads across the curve remain backwardated. Copper spreads are in backwardation all the way down the curve. The benchmark cash/three-month spread was last trading at $336 per tonne backwardation on Monday, compared with $257 per tonne at the close on Friday.

Aluminium volumes were beating copper this morning with 9,090 lots of aluminium traded at 10am London time versus 6,608 lots of copper.

The three-month aluminium price also continued to rise on Monday morning, up by $21 per tonne to $3,192 per tonne. It hit a high of $3,229 per tonne earlier this morning.

The aluminium cash/three-month spread is in a $20.50-per-tonne contango, but further down the curve is also in backwardation. The December 2022 to December 2023 spread is in a $283-per-tonne backwardation.

Zinc bucked the trend after being the star performer last week - but the price still remains relatively high and is above $3,700 per tonne.

"Zinc rallied 20.4% last week to the most since 2007 at $3,944 as both Nyrstar and Glencore announced smelter cuts. Together these smelters account for 11% of annualized global smelter output, but it is still unknown how long the cuts will go on for," Anna Stablum, LME desk at Marex said.

The three-month zinc price was most recently trading at $3,767 per tonne, edging down from $3,794.50 per tonne at the 5pm close on Friday.

Other highlights

The three-month nickel price was up by $80 per tonne to $20,100 per tonne. It has already traded in a range of $19,875-20,260 per tonne this morning. The dollar index was up by 0.11% to 94.12. Data out on Monday showed China's retail sales climbed by 4.4% year on year in September, up from the 2.5% gain in August; fixed asset investment rose by 7.3% in the year-to-September, compared with an 8.9% gain in the year-to-August; industrial production climbed 3.1% in September, after a 5.3% in August; and China's unemployment rate dropped to 4.9% in September, from 5.1% in August.

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